How are QDROs and QILDROs Used to Divide Retirement Assets in a Divorce?

 Posted on February 23, 2023 in Divorce

QDROs (Qualified Domestic Relations Orders) and QILDROs (Qualified Income Reduction Orders) are legal orders issued by a court to divide retirement assets between divorcing spouses. Today, we will discuss how these orders may be used in an Illinois divorce case. As always, if you are getting a divorce, consider consulting with a qualified attorney to guide you through the legal process.

What is Most Important to Know About QDROs? 

In Illinois, QDRO is a legal order that provides instructions for dividing  a qualified retirement plan, such as a 401(k) or pension plan, in a divorce. QDROs are considered beneficial tools in protecting retirement accounts' tax benefits. 

When a couple gets divorced in Illinois, any retirement benefits earned by either spouse during the marriage may be considered marital property subject to division. This means that the court may order that a portion of one spouse's retirement benefits be paid to the other spouse as part of the divorce settlement. To divide a qualified retirement plan, a QDRO is typically required to do this. The QDRO must be approved by the court and the administrator of the retirement plan. The QDRO will specify how the retirement benefits are divided between the parties, such as a percentage or a specific dollar amount. To be clear: you do not automatically receive a QDRO. You must request one, and the court must then approve the request. 

A QDRO has four key elements that must be present to be valid. These elements include the following:

• Identification of the plan – The QDRO must identify the specific retirement plan to which it applies, including the name and address of the plan administrator. 

• Identification of the parties – The QDRO must identify the participant in the retirement plan and the alternate payee.

• Specification of the amount or percentage – The QDRO must specify the amount or percentage of the participant's benefits to be paid to the alternate payee. 

• Court's signature – The QDRO must be signed by a judge or other authorized official to ensure it is legally enforceable. 

What is Most Important to Know About QILDROs? 

QILDROs are controlled by Illinois state law. QILDROs are generally used when a spouse works for the state of Illinois or Chicago and thus has a retirement account through SERS, the State Employees Retirement System. Through the QILDRO, the order will direct SERS to allocate a specific portion of a member's retirement benefit to an alternate payee. This alternate payee is usually the former spouse, but not always. Please be aware that a QILDRO is designed to terminate when the participant dies, or an alternate payee dies. 

Contact a DuPage County Divorce Attorney

The division of retirement assets can be a highly complicated process. To help ensure the process is done lawfully, contact the experienced Wheaton divorce lawyers with The Stogsdill Law Firm, P.C.. Call 630-462-9500 for a private consultation. 

Sources: 

https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=004000050K1-119

https://www2.illinois.gov/sites/SRS/SERS/Resources/Pages/FAQ-QILDRO.aspx